OFGEM yesterday published a press release along with a consultation piece which was headed up "OFGEM Clears Up Green Tariff Confusion". Unfortunately I wish it were so, as I believe there is every possibility that if the guidelines to customers OFGEM are proposing are adopted, this could lead to even greater confusion in the market itself. There have been numerous studies commissioned, amongst them one by OFGEM, which consistently show that for most people "Green" in terms of "Green Tariff" is synonymous with renewable energy. Therefore, most customers expect that all electricity included in a Green Tariff should come from renewable sources and we know that is simply not the case at the moment.
Under OFGEM’s proposals suppliers will be able to launch a series of options which will illustrate additional environmental benefits – such as proposals around demand management, renewable heat, or offsetting. All of these I have no problem with, but they are environmental benefits and not what people expect of a Green Tariff. The whole purpose, from a customer’s point of view, is that buying a Green Tariff should result in more renewable energy being brought to market. However, and to be fair to OFGEM they do make this clear, just re-packaging what is already an obligation under Government plans is not likely to bring forward any additional renewable energy capacity to the Grid. If these tariffs were offered as Environmental Tariffs that’s one thing, but to call them Green Tariffs means customers will not be able to exercise their buying power to drive even greater demand for renewable energy in the medium term.
One of the key reasons for the consultation and for OFGEM taking action was that customers consistently tell us they need to be able to understand the attributes of each tariff on offer. However, under OFGEM’s proposals suppliers will not need to provide information about how much renewable energy is included within individual tariffs only that they declare their overall fuel mix, which includes renewables, gas, coal even nuclear.
So how do customers know what they are buying? It’s as if Marks and Spencer were to label all of their sandwiches with the mix of ingredients contained in all the varieties of sandwich sold within its range, rather than the ingredients specific to that sandwich. What the customer wants is clear and simple information so that they can make informed choices about the sort of energy they buy. I cannot see how this scheme will deliver on that aspiration. We will not doubt see this one run and run. I am all in favour of giving the public an increasing choice around environmental benefits, but that is not the same as clearing up the confusion around Green Tariffs, far from it.